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Joint incentives vs individual incentives

11th Feb 2014

Those of you who have been reading this blog for a while will know that we like to highlight interesting new findings that we come across in the growing behavioural science literature.

This time, we have chosen a field experiment conducted in Uruguay, which tests the impact of group incentives, or ‘joint incentives’ against individual incentives.

The researchers divided students into three groups: a control group; an ‘individual incentive’ group; and a ‘joint incentive’ group.

In the individual incentive group, students could increase their grades by passing a take-home exam and having no absences in the week of the exam. In the joint incentive group, the researchers split students into teams. Each team received a grade increase only if all team members passed the exam (and had a perfect attendance record). The control group had no additional incentives (they were graded as usual).

Though the sample size was small (n = 51), the several effects were significant. On average the joint-liability group students scored higher on their midterm exams compared with the control group. They also scored higher on their homework and midterm exams in other courses. And, not surprisingly, these students handed in more take-home tests and performed better on them. This is consistent with previous research which shows that peer effects can be very influential in schools.

There was a downside, however. Students in the joint incentive group reported that their satisfaction with their classmates suffered (compared to the two other groups). The individual incentive group showed no change in grades, attendance or classmate satisfaction.

Anecdotally, companies such as Pret a Manger use team-based incentives and reports suggest positive impact. Whilst it is too soon to draw wide ranging conclusions, it would be interesting to see a replication of this trial in a real workplace.

Joint-Liability vs. Individual Incentives in the Classroom Lessons from a Field Experiment with Undergraduate Student (Awaiting Publication), José María & Alejandro Cid.

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Joanne Reinhard